Monthly Archives: November 2009

Bangladesh plans to launch satellite
Negotiates with leading countries for tech support

Sajjadur Rahman

Bangladesh plans to launch its own communications satellite within a year, Post and Telecommunications Minister Raziuddin Ahmed Raju said yesterday.

The cost of the programme will be between $150 million and $200 million, he said.

The minister disclosed the government plan to reporters during a media briefing.

“We’ve already started talking to different countries including the US, Japan and China, to help us launch our own satellite,” the minister told The Daily Star over the phone.

The satellite would serve commercial purposes including improving telecom services, helping to meet the booming demand for it. Telecom operators could subscribe to satellite services on a commercial basis, the minister added.

Television broadcasting, and meteorological data including disaster warnings would be available easily by the satellite. It might also be used for mapping natural resources, and to predict weather to help farmers, experts said.

“We are very serious. We hope to give the people the good news soon,” said Raju.

He said the government is discussing the technical aspects with the US, Japan and China that have vast experience in the field. Some other countries are also showing interest, he added.

After assessing the proposals of interested countries, the government will pick the one that is most favourable for Bangladesh, the telecom minister said.

“Financing by the interested country will be an important criterion for awarding the contract,” he said.

Experts have welcomed the venture saying that satellite technology would provide quality and faster telecom services to the people, and reduce the risks associated with natural calamities.

“A satellite of our own can benefit us a lot, including better weather forecasting and survey of mineral resources,” said Satya Prasad Majumder, a professor of electrical engineering and electronics at Bangladesh University of Engineering and Technology (Buet).

Currently, Bangladesh subscribes to information about its mineral resources from the US, he said.

Majumder said a satellite could also help control mass communication traffic, such as television and radio broadcasting.

“You don’t need a cable TV network if you have satellite services,” the Buet professor also an expert on communication technology told The Daily Star.

Syed Margub Morshed, former chairman of Bangladesh Telecommunication Regulatory Commission said a satellite can give a country uninterrupted communication services.

“If the fibre optic cable is snapped, services will remain undisturbed through VSAT for the satellite,” he said.

There are several thousand satellites in space, launched by more than 50 countries. Bangladesh’s neighbours India and Pakistan launched their own satellites in 1980 and 1990 respectively.

Earlier manufacturers had to pay tariff of Tk 10,000 for producing CR coil from HR coil, and Tk 15,500 for making CI sheet from CR coil, totalling Tk 25,500.

The NBR has reduced tariff in every stage of production of CR coil or CI sheet from HR coil.

The tax administration has fixed different tariffs to create a level-playing field for those companies who have to pay more tax for not having the facilities to produce CI sheet directly from HR coil.

“We have reduced tariff, as local manufacturers have been demanding it for long. We hope this reduction will help importers and manufacturers cut their production cost,” said a high official of the VAT (value added tax) Department.

“Now the government will be able to collect more revenue than before,” he said.

He said the manufacturers would be able make high quality products, including CI sheet (tin), window, door, steel closet or cupboard, ceiling fan and tube light box that have a huge demand in the local market.

“Earlier the production of CR coil and CI sheet from HR coil was under the same tariff and VAT registration, which led to uneven practices over the cost of production,” he said, adding: “It often compelled us to pay excess VAT.”

“Now we will be able to compete with the imported finished products and make things at lower costs that will increase production.”

Mohammad Nasir Ullah, vice president of Bangladesh Iron and Steel Importers’ Association, said the government decision would help the importers of HR coil, ultimately benefitting the steel product manufacturing and the real estate sectors.

Abdur Razzaque, president of Bangladesh Engineering Industry Owners’ Association, said the prices of raw materials will witness a decline, helping the sector grow faster.

$5b energy projects to be on offer for overseas investors
Road shows in London, NY, S’pore next month

M Azizur Rahman

The government will offer energy projects worth $5.0 billion to global firms for investment during the overseas road shows in London, New York and Singapore slated for next month, officials said Wednesday.

“The projects include large power plants and a liquefied natural gas (LNG) terminal,” power secretary Abul Kalam Azad told the FE.

The power ministry will urge international reputed companies to invest in the $4.0 billion power projects and $1.0 billion LNG terminal.

The road shows will be held in London on December 15-16, New York December 17-19 and Singapore December 21-22, said the power secretary.

“We will require investments worth $7.0 billion for electricity generation in the next five years until 2014,” Bangladesh Power Development Board (BPDB) chairman ASM Alamgir Kabir told the FE Thursday.

Several multilateral donor agencies, including the World Bank, Asian Development Bank and Japan International Cooperation Agency (JICA), have already committed to provide fund worth $3.0 billion for building the independent power producer (IPP) projects, said the BPDB chairman.

The remaining $4.0 billion IPP projects will be put in place for the global players during the road shows, he said.

The IPP projects that will be put on offer for investment during the overseas road shows include Bibiyana 450 megawatts (mw), Meghnaghat 450 mw and Bhola 225 mw projects.

Four coal-based power plants to generate a total of 2,000 mw of electricity and two furnace oil-run IPP projects to generate 100 mw of electricity each at Savar and Kaliakoir also planned for offer for investment.

“The LNG terminal project worth $1.0 billion has been incorporated for offer alongwith with the large power plant projects for offer to ensure the country’s future energy security especially in the port city Chittagong,” Petrobangla chairman Dr Hussain Monsur said.

Initially, the LNG project was not planned for offer during the road shows.

The government is planning to set up a LNG terminal in the port city Chittagong with a target to meet the soaring energy demand for the liquefied gas, said the Petrobangla chairman.

He said the capacity constraints of the country’s existing transmission pipelines along with the sharp fall of Sangu gas output have led to the energy supply crunch in the port city.

“The Ashuganj-Bakhrabad gas pipeline does not have the capacity to carry gas beyond 185 million cubic feet gas per day (mmcfd) from the country’s gas-rich northeastern Sylhet region to the southeastern Chittagong,” said the Petrobangla chairman.

This pipeline is currently carrying 170 mmcfd of gas.

The country’s lone operational offshore Sangu gas field is now supplying only around 40 mmcfd of gas, which was as high as 220 mmcfd before, he added.

The Sangu is experiencing pressure drop by day and the experts predict the field will be out of operation by next two years, Dr Monsur said.

He said setting up of the LNG terminal in Chittagong and the subsequent import of LNG will end energy crisis in Chittagong as the power plants and industrial units could meet their energy needs by LNG.

A number of industries could not go into operation in the port city only due to energy supply shortfall.

Energy ministry officials said the government has moved to arrange the overseas road shows to woo the global players for investment in the country’s energy projects, seen crucial to cope with the country’s soaring energy demands.

Bangladesh urgently needs new energy sources as government forecasts have indicated that its current gas reserves will run out by 2014-2015 at current consumption rates.

The much-awaited formation of state-owned Bangladesh Development Bank Ltd (BDBL) has reached the final stages with its registration completed with the Office of the Registrar of Joint Stock Companies and Firms.

The central bank also approved a plan for BDBL to run as a scheduled bank.

Officials say BDBL will be able to launch operations in January 2010, with industrial financing, commercial banking and merchant banking at the heart of its services.

“This is a good step taken by the government,” said Md Mizanur Rahman, managing director of BSRS. “We expect BDBL to compete with other commercial banks.”

The incorporation and business of commence have been permitted by the government, he said. It will sign a vendor agreement with the government soon.

BSB and BSRS, with almost similar functions, were established in 1972 to provide loans and facilities to industrial institutions, help set up new industries and expand investment in Bangladesh.

But the two companies failed to meet expectations. In 1992, the government moved to privatise BSRS, which remained unaccomplished due to some complexities.

The companies’ board will sit on December 8 to fix a vendor agreement schedule with the government, the BDBL organogram, employee pay structure and select office space for the bank’s headquarters.

As per merger plans, the accounts of the two organisations will be consolidated by December 2009.

The paid-up capital of the merged company will amount to Tk 400 crore. The present paid-up capital of BSB is Tk 200 crore, and Tk 70 crore for BSRS. Making adjustments to the reserve funds of the two companies will raise the capital. In the meantime, BSRS raised its funds to Tk 200 crore.

As per BDBL’s operational plans, the banks will operate across the country by setting up branches at district levels. At present, BSB has 15 branches while BSRS has two.

BSB and BSRS have financed 174 and 69 projects so far, according to the companies’ websites. As many as 1,000 officials are working for the two organisations.

The central bank in the upcoming monetary policy will focus on driving domestic demand until the global economies recover, said a senior Bangladesh Bank (BB) official.

The BB for the first time is consulting different stakeholders, including chamber bodies, banks and businesses, before formulating the new biannual monetary policy to be announced in January.

“The policy will focus more on raising domestic demand. We didn’t formulate such a detailed policy before,” said Habibullah Bahar, economic adviser to the central bank.

The BB released in July an expansionary monetary policy statement for a six-month period up to December.

The policy took a stance to extend credit to agriculture, small and medium enterprises (SMEs), rural economy, housing, shipbuilding and rural energy.

However the country is facing a sharp decline both in global and domestic demand despite the BB’s expansionary monetary policy. Banks are overflowed with cash and finding no avenues to invest in, mainly due to energy crisis.

According to BB statistics, private sector credit growth went down to below 14 percent in September, the lowest in the last two years. The credit growth was 14.26 percent in August.

The banks lent private sector, including companies, flat buyers, consumers, farmers and traders, Tk 27,200 crore in September this year, while the figure was over Tk 41,800 crore in the same month a year ago.

Even a sharp cut in repo rate from 6.5 percent to 4.5 percent could not stimulate private sector demand. By repo the central bank sells money to the commercial banks.

Inflationary pressure is also mounting in the wake of a hike in commodity and fuel prices in the global markets. International Monetary Fund has also hinted a rise in inflation that may reach a double-digit level at the end of the year.

“The new policy will help generate inward-oriented demand and employment,” the BB economic adviser said.

He said raising domestic demand will be prioritised as the global recovery is lingering.

The policy will give importance to the SMEs and agriculture to boost demand, he added.

Some 15 million farmers, for the first time, will get ‘agri-inputs distribution cards’ by next month in a move that will support the government to streamline its payment system for the agriculture sector.

“Necessary preparations have been completed to distribute the cards among the farmers by the end of December,” a senior agriculture ministry official told the FE Thursday.

The agriculture ministry has planned to complete the card distribution process by next month for ensuring smooth supply of urea fertliser and disbursement of proposed subsidy on diesel and electricity for running irrigation pumps in the ensuing ‘Boro’ plantation season.

Details about the extent of cropping lands, use of agricultural inputs like seeds and fertilisers, amount of payable government subsidies and types of cultivated crops by an individual farmer will be incorporated in the agri-input distribution cards, said the official.

According to the ministry officials, the government will provide cash subsidy and other agriculture inputs to farmers on the basis of such cards.

“The card will not only help the government to systematically distribute subsidies and other inputs among farmers, but also check leakage and irregularities in their payment system,” said an official.

Besides, introduction of the cards will also help the government to fix the country’s demands for agri-inputs including fertilisers so that necessary steps can be taken on time.

The government has already prepared the list of about 15 million farmers following a countrywide survey conducted by the Department of Agriculture Extension (DAE) for distribution of such cards.

Officials said the authorities will update the list of such cards every year.

Distribution of the agri-input distribution cards has been initiated against the backdrop of the government’s plan to establish an agricultural database.

Official sources also said the government has completed the process of appointing dealers and retailers at all upazila levels to ensure uninterrupted supply of fertiliser, especially urea, during the upcoming Boro season.

An average nine retailers have been appointed for every upazila against each authorised dealer for ensuring greater access of farmers to fertiliser, they mentioned.

Pran that exports to more than 70 countries plans to cash in on the growing market for agro-processed foods.

“We will purchase mainly from our contract farmers. We believe such direct buying helps farmers get fair prices as it reduces scope for middlemen to make extra gains,” said Kamal. Pran procures agricultural produce from more than 10,000 contract growers.

Of the Tk 400 crore purchase plan, a fourth or Tk 100 crore will go into procuring mangoes to extract the pulp that makes mango flavoured juice and strengthen its position in the mango drink segment.

Currently, more than 10 local and foreign brands are competing in the category to dominate the rising mango-flavoured drink market.

Pran bought mangoes worth Tk 70 crore from farmers this year.

This year, aromatic rice, fresh milk, tomatoes and spices will account for most of the procurement.

“We have close connections with farmers in rural areas,” said Kamal, adding that the contract farmers are offered market prices.

“We have contract growers in various districts such as Rajshahi, Natore and Chapainawabganj. They produce tomato, aromatic rice, mango, peanut, milk and spices.”

Kamal said the company wants to bring in more farmers under contract next year to ensure guaranteed supplies of fresh agricultural produce.